In a circular issued at the start of November 2026, the Insurance Regulatory and Development Authority of India (IRDAI) directed insurers to restructure every private car and two-wheeler policy into four distinct sections from 15 December 2026, as reported by Business Standard, BusinessToday, Angel One and others between 3 and 5 November. Third-party liability stays compulsory, as the Motor Vehicles Act 1988 requires. Personal accident cover for the owner-driver stays compulsory. Everything else, including cover for damage to the vehicle itself and legal liability to the people riding in or on it, becomes an option that the customer selects on a form. The regulator's stated aim is choice and transparency. The side effect, for anyone buying a second-hand vehicle, is that the phrase "insurance is valid till next year" will no longer tell you what is actually covered.
What Changes on 15 December, and What Stays Compulsory
Today a typical "comprehensive" policy bundles third-party liability, owner-driver personal accident and own-damage cover into one premium, with passenger cover tucked in as an add-on or an unnamed line. From 15 December 2026, as the press reports describe the circular, the policy schedule must show four sections, each with its own coverage and its own premium, and the insurer must hand over a Customer Information Sheet summarising them. The customer fills in an option form, online or at the counter, choosing which optional sections to take. Insurers keep their freedom to price the own-damage section according to market conditions.
| Section | What It Covers | Who It Protects | Status From 15 Dec 2026 |
|---|---|---|---|
| 1. Third-party liability | Death, injury or property damage caused to others by the insured vehicle | Third parties on the road | Mandatory under the Motor Vehicles Act 1988 |
| 2. Legal liability to occupants | Liability to passengers in a car, pillion riders on a two-wheeler, and specified employees of the insured | The people riding with you | Optional |
| 3. Personal accident | Death or disability of the person named | Owner-driver; optionally other occupants, pillion riders and other drivers | Mandatory for owner-driver; optional for everyone else |
| 4. Own damage | Repair or replacement of the insured vehicle after accident, theft, fire, flood and similar | The vehicle, and so the owner's wallet | Optional |
Two details in the Angel One report matter for buyers. The number of occupants covered under section 2 cannot exceed the vehicle's registered seating capacity, so a five-seater cannot be insured for seven passengers. And the occupant liability section excludes the owner-insured and immediate family; it is designed for the friend, the colleague, the paying passenger and the employee, not for the family who are expected to look to section 3. The restructuring follows Supreme Court directions in National Insurance Co. Ltd v. Smt. Thungala Dhana Laxmi and Others, according to Angel One and BusinessToday; other outlets do not mention the case.
Mid-term top-up. As reported, a policyholder who already holds a third-party-only policy does not have to cancel it to get occupant or pillion cover. They can add the section from the same insurer by paying the extra premium, and the cover starts from the date and time of the endorsement. Insurers must also integrate the four-section structure with Bima Sugam by 15 December 2026, so the new products are expected on that marketplace from the same date. We looked at what Bima Sugam does and does not do for used-vehicle buyers earlier this year.
No premium figures were published alongside the circular. Business Standard reported on 4 November that insurers are warning customers not to strip optional sections simply to save money, since a policy that pays nothing for the vehicle or the passengers can leave the owner badly exposed. This article does not quote or estimate any premium. For a plain-English explanation of why own-damage cover matters in the first place, see own-damage versus third-party cover, and for the wider rule changes this year, our summary of the 2026 motor insurance rule changes.
Why the Used-Vehicle Buyer Is the Person Most Exposed
A new-car buyer at a dealership will have the option form put in front of them and a salesperson explaining it. A used-vehicle buyer gets none of that. They inherit whatever the seller chose, often months earlier, with a different budget and a different appetite for risk. After 15 December, a seller who renewed cheaply could be holding a policy that satisfies the Motor Vehicles Act, shows an insurer name and an end date on the official VAHAN record, and pays out nothing if the vehicle is written off the day after you take delivery.
The official record is still the place to start, because it answers the first question honestly: does any policy exist, and until when. The Rs. 99 RC Check reads the VAHAN entry for the registration number and returns the insurer name and policy end date, alongside the owner count, hypothecation, fitness and blacklist status. What the record does not carry is the section-by-section detail; it was never designed to. So the record tells you whether to walk away (no policy, or a lapsed one), and the policy schedule tells you what you are actually buying into.
"Valid" is no longer the same as "covered". From 15 December, treat the insurance line on the RC record as a yes-or-no gate, not as a guarantee. A "valid till" date with a well-known insurer could sit on a four-section policy where sections 2 and 4 were never ticked. Ask for the policy schedule and the Customer Information Sheet, and look at each section before you assume the vehicle is insured against its own damage.
There is a second exposure that predates the circular and that the new structure makes sharper. Insurance stays in the seller's name until it is transferred. The buyer has, as commonly reported under Section 157 of the Motor Vehicles Act, 14 days after the RC transfer to apply for the policy to move into their name. The third-party part is treated as following the vehicle during that period, but an own-damage claim on a policy that still names the seller can be rejected, and insurers have rejected them; our report on claims refused because the policy was in the seller's name walks through how that plays out. From 15 December, a buyer transferring a policy will also have to choose their own sections, which means a seller's thin policy is not the buyer's problem for long, as long as the buyer acts inside the window.
The no-claim bonus is the final piece, and it cuts the other way. NCB belongs to the seller, not the vehicle. A seller who has driven claim-free for years takes that discount with them to their next vehicle, and the buyer's own-damage premium is calculated without it. Our tip on transferring NCB when you sell covers the paperwork from the seller's side; the buyer should simply not expect to inherit it.
Pillion Cover on a Used Bike or Scooter: Read This Before You Carry Anyone
For two-wheelers, the most important word in the circular is "pillion". Under the four-section structure, legal liability to a pillion rider sits in section 2, which is optional, and personal accident cover for the pillion sits in the optional part of section 3. The owner-driver's compulsory personal accident cover does not stretch to the person on the back seat. A scooter with a perfectly legal policy, issued after 15 December, can therefore be one where the rider is covered and the pillion is not, unless the owner specifically chose to pay for it.
That matters for the used market more than the new one. Roughly a third of buyers who pay for a check are checking bikes, trucks and three-wheelers rather than cars, based on VahanBazaar data, and two-wheelers change hands informally more than any other class of vehicle: on a delivery note, between relatives, between a student and the next student. The buyer of a second-hand scooter who carries a friend to college or a spouse to work is relying on a policy they did not choose and have usually not read. Our checklist for reading the VAHAN record on a used bike or scooter now needs one more line: ask whether the pillion is covered.
What to ask the seller of a two-wheeler
Ask for the policy schedule, not the one-page certificate. On a post-15 December policy, look for section 2, legal liability to occupants or pillion rider, and for any pillion entry under section 3, personal accident. If neither is present, the honest position is that the pillion has no cover under that policy. As reported, the gap can be closed mid-term by paying the same insurer for the endorsement, so it is not a deal-breaker, but it is a cost you should know before agreeing the price, and after the transfer you will be choosing the sections for yourself anyway. Keep in mind, too, that the Supreme Court has been pressing on two-wheeler insurance from the other direction this year; see the six-year two-wheeler insurance proposal and, for cars, the three-year third-party cover rules, both of which interact with how long a seller's policy will run after you buy.
Seating capacity is a ceiling. Occupant cover under section 2 cannot exceed the registered seating capacity, per the Angel One report. On a two-wheeler that is the rider plus one pillion. A seller who says the policy "covers everyone" on a scooter that routinely carries three is describing a wish, not a policy.
Buyer Playbook: Record First, Schedule Second, Transfer Inside 14 Days
The order matters. Check the official record before you spend time on the policy document, because a vehicle with no policy or a lapsed one is a different negotiation altogether. Then read the sections. Then move fast after the transfer.
- Run the Rs. 99 RC Check on the registration number. Confirm that a policy exists, note the insurer and the end date, and read the owner count, hypothecation and blacklist flags at the same time. A vehicle showing no insurer, or an end date already past, is being sold uninsured, whatever the seller says.
- Ask for the policy schedule and the Customer Information Sheet. On any policy issued from 15 December 2026, both documents should show the four sections and the premium against each. If the seller only has a one-page certificate, ask the insurer's helpline or app for the schedule; it is the seller's document to request.
- Confirm whether own damage (section 4) is included. If it is not, the vehicle is insured only for harm it does to others. Price the gap into your offer, because you will be paying for own-damage cover yourself from the day of transfer.
- On a two-wheeler, confirm pillion cover (section 2 and the optional part of section 3). If it is missing, decide whether you need it and budget for the endorsement or for choosing it at transfer.
- Apply for the policy transfer within 14 days of the RC transfer. As commonly reported under Section 157 of the Motor Vehicles Act, that is the window. From 15 December, the transfer is also the moment you choose your own sections; do not let the seller's choices become yours by default.
- Re-run the RC Check after transfer. Rs. 99 again confirms the record now shows you as owner and reflects the current policy. Do not rely on a WhatsApp screenshot from the seller.
If you are shopping in a big metro, the volume of policies renewed cheaply is likely to be highest where premiums are highest. Buyers browsing used cars in Delhi, Mumbai or Bengaluru should assume nothing about the seller's cover until they have seen the schedule.
Four sections. Two compulsory. One record to check first.
The RC Check reads the insurer and policy end date from the official VAHAN record, with owner count, hypothecation, fitness and blacklist status. Rs. 99 on its own, or Rs. 149 for the Full Report with challans.
Seller Playbook: Keep the Cover Running, Keep the NCB, List Clean
If you are selling a car, bike or scooter in the next few months, the four-section rule gives you one more thing to get right and one easy way to stand out. First, think carefully before letting own-damage cover lapse while the vehicle is still in your name. Until the RC transfers, the vehicle is legally yours, and a buyer's test drive that ends in a dent is your claim, not theirs. If your renewal falls after 15 December, you will be filling in the option form yourself; consider keeping section 4 at least until the sale closes.
Second, ask your insurer for the NCB retention certificate when the policy is transferred or cancelled. The bonus is yours, not the vehicle's, and it moves to your next policy. Third, have the policy schedule and Customer Information Sheet ready to share with any serious buyer. From 15 December every buyer who has read this article, or any of the press coverage, is going to ask for them; the seller who produces them on the spot is the seller whose deal closes.
Then list. A verified listing on VahanBazaar costs Rs. 99 and is cross-checked against the official VAHAN record at the time of listing. Verified listings on average draw about 3x more buyer enquiries and sell around 40 per cent faster, based on VahanBazaar listings data. It works for bikes, scooters, autos and trucks as well as cars.
What a clean handover looks like after 15 December. RC record shows you as owner with a current policy and no financier, or a bank NOC in hand. Policy schedule shows which of the four sections you hold, with own damage running until the transfer. NCB retention certificate requested. Buyer told clearly what is and is not covered, so the policy transfer within 14 days is a formality and not a dispute.
What Is Still Unclear, and What to Confirm
The press reports agree on the structure and the date but leave several practical questions open. The exact format of the customer option form, and whether a used-vehicle buyer transferring a policy will fill in a fresh one or inherit the seller's choices until renewal, is not spelt out in the coverage we have seen. How insurers will present the four premiums on a renewal notice, and whether a "comprehensive" label will survive as shorthand for all four sections, is for the insurers to decide. The reports differ on whether the circular is dated 2 or 3 November 2026, which is why we describe it as issued at the start of the month. And while insurers are required to integrate with Bima Sugam by 15 December, how a buyer will use the marketplace to transfer or re-section a policy on a second-hand vehicle is yet to be seen.
One related change is worth watching alongside this one: the no-insurance, no-fuel enforcement pilot using number-plate cameras, which we covered in our report on the ANPR pilot. If that spreads, the yes-or-no question the RC record answers becomes an everyday one at the petrol pump, while the section-by-section question stays between you and the policy document.
This article is general information, not legal or financial advice. The four-section structure, dates and conditions above are as reported in the business press between 3 and 5 November 2026 from an IRDAI circular issued at the start of that month; the circular's final text, the option form and insurers' product filings may differ in detail. No premium figures have been published and none are given here. Whether a particular policy covers a particular loss depends on its schedule, its sections and its terms. Read the policy schedule and Customer Information Sheet for any specific vehicle, and confirm with the insurer, before relying on the cover or agreeing a price.
Valid Is Not the Same as Covered. Check the Record, Then Read the Sections.
The RC Check reads the insurer and policy end date from the official VAHAN record, with owner count, hypothecation, fitness and blacklist status. Rs. 99 on its own, Rs. 149 for the Full Report with challans. Sellers: keep own damage running until transfer, then list verified for Rs. 99.
Frequently Asked Questions
No. Under the IRDAI circular issued at the start of November 2026, as reported by Business Standard, BusinessToday and others, own-damage cover for the insured vehicle is one of the optional sections of a private car or two-wheeler policy issued from 15 December 2026. Only third-party liability, which the Motor Vehicles Act 1988 requires, and personal accident cover for the owner-driver stay mandatory. A policy can be fully legal and still pay nothing for damage to the vehicle itself.
As reported, the four sections are: third-party liability, which is mandatory; legal liability to occupants, meaning passengers in a car, pillion riders on a two-wheeler and specified employees of the insured, which is optional; personal accident cover, mandatory for the owner-driver and optional for other occupants, pillion riders and other drivers; and own-damage cover for the insured vehicle, which is optional. Insurers must show the cover and premium for each section separately in the policy schedule and provide a Customer Information Sheet.
Not automatically. From 15 December 2026, legal liability to a pillion rider is a separately priced optional section, and the owner's compulsory personal accident cover does not extend to the pillion unless that option is taken. If you are buying a used bike or scooter, ask the seller for the policy schedule and look for the occupant liability section; if it is not there, the pillion is not covered by that policy. As reported, existing third-party policyholders can add the section mid-term from the same insurer by paying extra, with cover starting from the endorsement date.
Run the Rs. 99 RC Check on the registration number. It reads the official VAHAN record and returns the insurer name and the policy end date, along with owner count, hypothecation, fitness and blacklist status. That tells you whether any policy exists and until when. It does not show which of the four sections were taken, so ask the seller for the policy schedule and the Customer Information Sheet to see whether own-damage and occupant cover are included.
As commonly reported under Section 157 of the Motor Vehicles Act, the buyer has 14 days after the RC transfer to apply for the policy to be transferred into their name. The third-party part is deemed to follow the vehicle during that window, but a claim on a policy still in the seller's name can be rejected, especially for own damage. Apply for the transfer promptly and, from 15 December 2026, choose the sections you want at the same time.